Exam 7: Consumers, producers, and the Efficiency of Markets

Determine the amount of producer surplus generated in each of the following situations. a.Gordon lists his old electric train set for sale on an online auction.He sets a minimum acceptable price,known as his reserve price,of $75.After five days of bidding,the final high bid is exactly $75.He accepts the bid. b.Francis advertises his car for sale online for $5000,but he is willing to sell the car for any price higher than $2500.The best offer he gets is $2200,which he declines c.Lewis plays the organ during the Calgary Flames' home games and he likes his job so much that he would be willing to do it for free.However,his annual salary is $30,000.

Ryah sells investment advice for $150 per hour.Her cost is $40 per hour.What is Ryah's producer surplus

To what does normative analysis refer

What does total surplus in a market equal

Figure 7-6 ​ -Refer to Figure 7-6.Assume demand increases and as a result,equilibrium price increases to $22 and equilibrium quantity increases to 110.What would be the increase in producer surplus due to new producers entering the market

When the market price increases,producer surplus increases because (1) producer surplus received by existing sellers increases and (2) new sellers enter the market.

Consider the following equation: P = 0.5Q.Answer the following questions. a.What is the producer surplus when price is equal to $8 b.What is the change of the producer surplus when price changes to $10

Figure 7-6 ​ -Refer to Figure 7-6.If the price decreases from $22 to $16,by how much would consumer surplus increase

Figure 7-5 -Refer to Figure 7-5.What area represents consumer surplus when the price is P₁

Figure 7-2 -Refer to Figure 7-2.Which area represents consumer surplus at a price of P₂

Which area is producer surplus

Suppose a consumer is willing and able to pay $18.00 for a particular good but only has to pay $14.00.What is the consumer surplus

Table 7-2 -Refer to Table 7-2.If the market price is $5.00,what is the consumer surplus in the market

Why can a supply curve be used to measure producer surplus

What is the outcome if you pay a price exactly equal to your willingness to pay

Efficiency refers to whether a market outcome is fair,while equity refers to whether the maximum amount of output was produced from a given number of inputs.

Which outcome is NOT derived from market equilibrium

Answer each of the following questions on demand and consumer surplus. a. What is consumer surplus, and how is it measured? b. What is the relationship between the demand curve and the willingness to pay? c. Other things equal, what happens to consumer surplus if the price of a good falls? Why? Illustrate using a demand curve. d. In what way does the demand curve represent the benefit consumers receive from participating in a market? In addition to the demand curve, what else must be considered to determine consumer surplus?

Which equation calculates total surplus

What does consumer surplus measure